Every form was written before this existed
Nobody is interpreting a clause about crypto. They are stretching one about something else.
|
The Walkthrough
|
No. 023 · Thu 24 Sep
|
|||||
|
Subject of file — short
A question I could not answer at my brother's kitchen table
|
||||||
|
|
||||||
Good morning. I went over to my brother's on Sunday to help shift a chest of drawers up a staircase that was never built for it, and afterwards he put the kettle on and asked me whether his bitcoin was covered on the house policy.
I said I would find out. I have spent since Monday on it, and what I have is worse than not knowing.
|
Claimed, against paid
$170,424 → $500
A Virginia policyholder lost that sum from a wallet in 2021 and claimed on his homeowners policy. The insurer paid five hundred dollars under the electronic transfer limit and declined the rest. The Fourth Circuit agreed with the insurer in 2024.
|
The reasoning was that a policy pays for direct physical loss, and nothing physical had been lost. There is no hole in a wall and no empty shelf. The coins were somewhere and then they were somewhere else.
Six years earlier an Ohio court went the other way. The insurer there had paid out two hundred dollars, treating bitcoin as money under the sublimit we went through a fortnight ago. The judge disagreed, leaned on an IRS notice saying virtual currency is treated as property for tax, and held the sublimit did not apply.
Two courts, two states, the same question, opposite answers. Other courts have followed Virginia rather than Ohio, so the picture is not evenly balanced. It is not settled either.
|
In the margin
Every form I have ever read was written before this existed. Nobody is interpreting a clause about crypto. They are all stretching one about something else.
|
Newer policies have started naming it outright and excluding it, which at least answers the question. Older ones say nothing, and silence is where the litigation lives.
One thing is clear and I can state it without hedging: none of this is insured the way a bank deposit is. No federal scheme stands behind it, the specialist products aimed at individuals are few and narrow, and losses from self-custody are the least covered of all.
I told my brother that on Tuesday. He asked what I would do, and I said I did not know, which is where we left it.
|
Do this — two minutes
Search your policy document for the words digital, virtual and cryptocurrency. If they appear, you have your answer in writing. If they do not, you are in the silence, and the honest position is that nobody can tell you what a court in your state would decide.
|
|
Rates of record
|
||
|
Fed funds target
|
3.75–4.00%
|
raised 16 Sep
|
|
30-year mortgage
|
6.76%
|
PMMS, 10 Sep
|
He still has the chest of drawers on the landing, incidentally. It does not go round the corner at the top and neither of us wanted to say so on Sunday.
|
|
It does not go round the corner at the top, and neither of us wanted to say so on Sunday.
|
|
Signed
Rita Nowak
|
Standing instruction
Read the policy before you need it.
|
|
THE WALKTHROUGH · BUFFALO, N.Y. · SIX MORNINGS A WEEK
Nothing here is insurance, legal or financial advice. I am a former claims adjuster, not an agent, a lawyer or an adviser of any kind on digital assets. Court decisions differ by circuit and policy wording differs by carrier. Read your own document and take a real question to somebody licensed where you live.
|
